GDP Tends to Underestimate the Productive Activity in the Economy

question 97

Multiple Choice

GDP tends to underestimate the productive activity in the economy because it excludes the value of output from:

• A) Public transfer payments to households
• B) The consumption of fixed capital
• C) The underground economy
• D) Intermediate goods

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Definitions:

Semantic Networking

A method used in cognitive psychology to model how human memory organizes information, where concepts are linked together based on their meanings.

Divergent Thinking

A thought process used to generate creative ideas by exploring many possible solutions, fostering innovation and problem-solving.

Convergent Thinking

A type of thinking that aims to find a single, correct solution to a problem by focusing knowledge and reasoning.

Functional Fixedness

A cognitive bias that limits a person to using an object only in the way it is traditionally used, hindering problem-solving.